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HMRC internal manual

Self Assessment Manual

From
HM Revenue & Customs
Updated
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Assessments: assessments within SA: making an assessment

General

The precise procedures for making an assessment and taking any consequential action will differ from case to case.

In general the method used for making an assessment will depend upon

  • The taxpayer type
  • The year for which the assessment is required

As the assessment will result in increased liability, you may have to adjust the payments on account for the following year. This, however, will depend upon the circumstances of the case. Follow the guidance in the Action Guide ‘Discovery: Update Payments on Account for Next Year’ (SAM31054) to decide whether payments on account need amending and what amendments are necessary.

You should also consider whether the relevant date for Section 86 interest purposes requires amending. If you use function CREATE REVENUE ASSESSMENT to record the charge arising from the assessment then the relevant date(s) will be those relating to the statutory due dates for the year of assessment. Any change to those dates will need to be made using SA function AMEND RELEVANT DATES.

Individuals, Pension Schemes and Trusts

If the assessment is required for a pre SA year, (1995-96 and earlier) 

  • Prepare and issue a Schedule E assessment, using a manual P70 set
  • Use Technical Support System (TSS) to create a Schedule D, Capital Gains or Taxed Income calculation and use SEES Forms and Letters to produce the letter

After you have made the assessment you must record the charge on the taxpayer’s SA record using function CREATE REVENUE ASSESSMENT. You should enter the figures in the Total charge and Balance fields leaving the Payment on Account fields blank.

Alternatively, if the assessment results in an overpayment you should record the credit on the taxpayer’s SA record using function CREATE FREESTANDING CREDIT. See Action Guide ‘Creating a Freestanding Credit’ (SAM110082).

If the taxpayer has no SA record you should set up an SA record to handle the charge resulting from the assessment. In other cases you may need to re-activate a dormant SA record. However, where the assessment results in a credit, the repayment should be made manually, unless you need to set up an SA record for criteria that brings the taxpayer into SA.

If an assessment is required for an SA year, (1996-97 and later) 

  • Use TSS to create the calculation and SEES to produce the Revenue Assessment letter
  • Enter the charge onto the taxpayer’s SA record using function CREATE REVENUE ASSESSMENT
  • Use SEES Notes Paster to make an SA Note of the assessment details. This can be found under the Self Assessment category entitled Revenue Assessment

Pre 6 April 1994 Partnerships

If an assessment is required for a pre-SA year, (1995-96 and earlier) 

  • Use TSS to create the calculation and SEES to produce the Revenue Assessment letter

Where a partnership was assessed for 1995-1996 and earlier, the partners share an ‘individual’ SA record to allow for payment and collection of tax from the partnership.

Where an SA record with the taxpayer type ‘partnership’ cannot be created because normally under SA there will be no partnership liabilities, you will have to set up an SA record for the partnership with the taxpayer type ‘individual’ in the partnership name. The charge is then entered onto this record using function CREATE REVENUE ASSESSMENT. Enter the figures in the Total column and Balance column leaving the Payment on Account fields blank.

If an assessment is required for the year 1996-97 

  • Follow the guidance at SAM22000 onwards (‘Non SA assessing’) to make the assessment on the partnership

At the same time

  • Amend the partnership statement to reflect the amounts shown in the partnership assessment, including each partner’s share of the profits assessed and the income tax and Class 4 NIC due on that share. Because for 1996-97 the SA rules apply to partnerships, it is necessary to make this discovery amendment as well as the discovery assessment and to ensure that the figures in each always correspond

The assessment will become final once the time limit for making an appeal has passed or once any appeal has been determined. If you do not receive separate appeals in respect of each, treat any appeal received against the assessment as an appeal against the discovery amendment to the partnership statement. Remember to determine both when the time comes to do so.

Once the assessment has become final

  • Consequential amendments are made to each partner’s self assessment to reflect the revised share of the partnership profit and the resulting liability

If additional liability arises for years 1997-98 onwards an assessment is not made, but instead

  • An amendment is made to the partnership statement

And

  • Consequential amendments are made to each partner’s self assessment to reflect the revised share of the partnership profit and the resulting liability

Post 6 April 1994 Partnerships

For post 6 April 1994 partnerships the new rules for separate assessment of each of the partners will apply from the date of commencement. Therefore a separate record is required for the partnership and for each of the partners.

If an assessment is required for a pre SA year, (1995-96 and earlier) 

  • Use TSS to make a calculation and SEES to produce the letter for each member of the partnership

After you have made the assessment the charge must be recorded on the individual partners SA record using function CREATE REVENUE ASSESSMENT. Only complete the Total and Balance columns leaving the Payment on Account fields blank. Note: The charge is not to be recorded on the partnership record.

If the taxpayer has no SA record you will have to set up an SA record to handle the charge resulting from the assessment. In other cases you may need to re-activate a dormant SA record.

If additional liability arises for years 1996-97 onwards an assessment is not normally made, but instead

  • An amendment is made to the partnership statement

And

  • Once the partnership statement becomes final consequential amendments are made to each partner’s self assessment to reflect the revised share of the partnership profit and the resulting liability